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Wiley Company's income statement for Year 2 follows: Sales 5 2,35 Cost of goods sold 1,3 Gross margin 1,05 Selling and administrative expenses 4 Income before taxes 5 Inccme taxes 250 Net income 5 39E [ The company's selling and administrative expense for Year 2 includes $24 of depreciation expense. Selected balance sheet accounts for Wiley at the end of Years'l and 2 are as follows: The: 2 Year 1 Current Lea-ts Accounts receivable $215 $24 Inventory $164 $138 Prepaid expenses 3 34 $ 23 Current Liabilities Accounts payable $124 $ 31 Accrued liabilities 3 15 $ 29 Income taxes payable $12 $ 25 ' Required: 1. Using the direct method, convert the company's income statement to a cash basis. 2. Assume that during Year 2 Wiley had a $1D.I'}DD gain on sale of investments and a $10130 loss on the sale of equipment. Would these transactions affect the computation in {1} above? Required 1 Required 2 Using the direct method, convert the company's income statement to a cash basis. (Adjustment amounts deducted should be indicated with a minus sign.) Wiley Company Direct Method of Determining the Net Cash flows from Operating activities Adjustments to a cash basis: 0 Adjustments to a cash basis: 0 Selling and administrative expenses Adjustments to a cash basis: 0 Income taxes Adjustments to a cash basis: 0 $ 0